Let the next great platform war begin.

[Photo courtesy of Toyota]

By Neal Ungerleider3 minute Read

This article contains an interview with Karen Newman, IBM’s Head of Global Business for Automobiles and Aerospace.

The connected car race is heating up. On June 24, IBM and Toyota entered into a partnership to help build an app framework for new cars. Under a new agreement, Toyota will use an IBM-made application development platform for their T-Connect navigation and telematics service. Third parties will be able to build apps for Toyota cars using IBM’s SDK, and IBM stands to make a substantial (and undisclosed) fee by having their app framework used in Toyota’s cars.

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Toyota’s decision to make their cars “smart cars”–and to build functionality for apps and consumer-facing software into dashboards, touch screens, and radio consoles–is part of a larger trend by automakers to make car interfaces feel more like smartphones. Just this past week, Google announced a major push to bring Android into automobiles.

Custom-built navigation, car performance analysis, entertainment, and trip-planning apps do more than just provide customers with expensive car options they love. Custom nav also gives automakers like Toyota, along with the individual dealers that sell new cars, a secondary revenue stream thanks to the massive amounts of data points that telematics and in-car apps collect on users.

It’s not just that apps like Pandora are preferred by customers; it’s also that data about customers’ listening habits can give companies like Toyota a pretty good idea in aggregate how many customers drive their cars to work and how many customers drop off their kids at day care. The more apps and the more extensive a telematics platform an automaker offers, the more information they and their dealers can collect.

Ford introduced their Sync app framework in 2010; GM launched an API and app store earlier in 2014. Many other automakers, such as BMW, also offer similar app frameworks. But all those automakers trail behind Tesla, whose Model S features an iPad-like tablet inside every car. Although in-car apps currently mainly turn up in new luxury models, it’s safe to say they will be a fact of life for midrange and budget auto buyers within the next five years.

“What Toyota has purchased from us is a toolkit that allows developers to leverage, so as they build apps, so they are compatible with Toyota mobility platform,” says IBM executive Karen Newman. “I think we’re going to see more of this happen and it was great that they selected our tool for their platform.”

“We’re responding to bids at other OEMs that I obviously can’t mention, but I think it’s a hot area,” adds Newman. “Some OEMs wonder about if they want an app store in the car, or if an app store offered by other providers would be better for their context. I think there are some advantages to having your own app store, both in making sure apps are compatible with your vehicle and in branding stickiness. However, this is still in an infancy stage and OEMs are still trying to figure out where to go from here.”

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A May 2014 report by consulting firm Capgemini said that connected cars are primarily popular among younger consumers and buyers in growth markets such as Brazil and Russia. According to a survey conducted by the company, the most requested uses for in-car apps were direct connections to roadside assistance, real-time information on road closures and repair work, easier access to vehicle information like the auto manual, and route optimizers that would show small changes to reduce gas use. Infotainment uses such as in-car Facebook, Twitter, or in-car purchases of music or media were not requested by most respondents.

Toyota’s framework is based around IBM’s Lotus Expeditor for Automotives, a popular “Internet of Things” platform. Lotus Expeditor is a development platform that was traditionally used for industrial and kiosk purposes, and has not been as prominent in recent years.